Beyond Bossism

Professors Horwitz and Shapiro both raise helpful, thoughtful questions about the persistence of hierarchy in a stateless society.

I can’t, obviously, demonstrate praxeologically that there will be significantly fewer hierarchies in the workplaces of a freed market—that we should definitely expect more self-employment and a greater proportion of partnerships and cooperatives in a free economy. But let me note some reasons to think this might be the case.

Large, hierarchical firms seem likely to be beset by the incentive and knowledge problems that complicate the lives of state central planners.

The larger an organization, the more likely it is that managers will lack crucial information. This is both because there will be multiple layers separating various actors with relevant information (with institutional pressures impeding accuracy) and because there will be no system of prices encoding the information and usable for calculation.

In addition, the principal-agent problem besets large firms at multiple levels, fostering inefficiencies as workers—whether senior managers or front-line employees—seek their own goals rather than firm profitability.

Thus, it seems fairly clear that, all other things being equal, the smaller and flatter a firm is, the better the information available to participants will be. The more production decisions are based on actual market prices rather than on simulated intra-firm transfer prices, the more efficient and responsive to reality they’re likely to be. And the more a worker has skin in the economic game, the more likely she will be to make prudent, efficient, customer-responsive decisions.

It might seem, then, that smaller, flatter firms could be expected to out-compete larger, more hierarchical ones. But we don’t see lots of smaller, flatter firms in the marketplace. Does this mean that, contrary to expectations, larger firms really are more efficient?

Whether this is so will depend in significant part on empirical questions that can’t be sorted out a priori. But it does seem as if several factors in our economy might tend to help large firms ignore the diseconomies of scale that would otherwise render them unsustainably inefficient. Tax rules and regulations tend to encourage capital concentration and thus increased firm size. Subsidies reduce the costs inefficiently large firms might otherwise confront—and large firms can more readily mobilize the resources needed to enable them to extract wealth from the political process than small firms. And workers often lack access to the resources needed to start firms precisely because of state-sanctioned theft and state-secured privilege. Eliminating these factors seems likely to make alternatives to the large corporate firm significantly more viable.

And if they’re more viable, they can be expected to be more common. Freedom from arbitrary authority is a consumer good. Given the disgust and frustration with which many people view the petty tyrannies of the contemporary workplace, I suspect it’s a consumer good many people would like to purchase. At present, the price is high; there are very few opportunities to work in partnerships or cooperatives or to choose self-employment. So the question is: what might reduce the price?

The price is partly affected by the relative frequency of hierarchical versus non-hierarchical workplaces. So eliminating props for hierarchy ought to put more alternatives on the table. At the same time, people often don’t choose such alternatives because of the risks associated with doing so. Saying good-bye to corporate employment means taking responsibility for one’s own medical care and retirement (if, of course, you’re a worker who even has these options in the first place, as many purportedly part-time workers don’t), requires one to front the capital required to make start-up operations possible, and forces one to confront the spectre of unemployment if one’s start-up business fails. But medical care and retirement are associated with corporate employment primarily because of the current tax system; and medical care, in particular, would be more affordable by far in the absence of state regulation and state-driven cartelization, so that the challenge of caring for one’s health in connection with a mutual-aid network, say, would be much less daunting than at present. Start-up capital would be more available if state-confiscated resources were marketized and state-engrossed land available for homesteading, and less necessary, in any case, if state regulations didn’t drive up capitalization requirements. And unemployment would be more affordable if state regulations didn’t raise the minimum cost of living, and could be manageable by means of the support offered by mutual aid.

Furthermore, it’s not clear to me that it would be impossible to raise money in equity markets and from investment banks for partnerships, cooperatives, and solo ventures. There are ways to secure investments that don’t involve participation in governance—and of course significant quantities of stock for sale today don’t necessarily come with voting rights.

Thus, people who wanted to opt for boss-free workplaces would find it easy to do so in the absence of state-driven props for hierarchy and state-driven barriers to self-employment and employment in partnerships and cooperatives. And the fact that they did so, so that boss-free options were increasingly visible and numerous, would have consequences for boss-dominated workplaces, too. The availability of alternatives that offered people more dignity, more predictability, more security, and more opportunities for participation in decision-making would exert market pressure on conventional corporate firms, encouraging them to make theoretically boss-dominated workplaces more like those at other kinds of firms. The differences wouldn’t disappear, but they might be meaningfully reduced.

In addition, boss-dominated firms might experience greater pressure to democratize in virtue of unionization. To the extent that the state’s bargain with unions has been, all things considered, bad for collective action in the workplace, eliminating state labor regulation could open up opportunities for Wobbly-style direct action that could increase unionization and offer workers resultingly more extensive workplace protection. Again, even in non-unionized firms, there would be market pressure to mimic at least some features of unionized firms, both to avoid losing workers to those firms and to forestall union organizing efforts.

Moral suasion typically shouldn’t be seen as the primary driver of social change. But active advocacy on behalf of workplace dignity and fairness could obviously lead to changes in social norms and expectations that would further reduce the perceived legitimacy of bossism and encourage the flourishing of alternatives.

A free society wouldn’t and couldn’t eliminate investor-owned or boss-dominated firms—nor should it, not only because direct, violent interference with these patterns of ownership and control would be unjust but also because workers might often benefit from the ability to shift risk onto employers and investors. But eliminating state-secured privilege and remedying state-sanctioned aggression could create significantly greater opportunities for self-employment and work in partnerships and cooperatives.

Related

Ray

I’m surprised that no one so far has mentioned an obvious reason for hierarchy – natural inequalities. Some people are more intelligent, more visionary, and/or more inclined to entrepreneurship or management than others. Hierarchies allow some people greater sway over the production process.

http://www.facebook.com/astrekal Alex Strekal

Except we’re talking about social heirarchies that are caught up in social norms and powerful institutions – not a mere “natural order of unequality”. Conservatives (and their libertarian allies) have been trying to naturalize social heirarchy forever, and it’s not working. The idea that our current heirarchical relations represents a meritocracy that simply emerges from the abilities of “natural elites” is not believable by anyone who’s socially concious of the world.

Ray

I’m not sure why they are cliche strawmen – have they been invalidated? I agree that our current hierarchical relations do not represent a meritocracry. But that’s not necessary an argument against hierarchy. It might mean we need a different hierarchy, one that IS based on natural inequalities. I’m also not sure why this is not believed “by anyone who’s socially conscious of this world”. I look out into the world and see very few Steve Jobs. In every field there are a few who are amaxing. This includes entrepreneurship, but also science, philosophy, technology, etc.

http://www.facebook.com/astrekal Alex Strekal

“I’m not sure why they are cliche strawmen – have they been invalidated?”

It’s cliche strawmen because it doesn’t actually address what people are claiming. No one believes that everyone is literally “equal” in ability. It’s a sophmoric point to even discuss, and an easy route for libertarians to dismiss people’s positions without substantively addressing them.

The “natural awesomeness” of those at the top is not believed by anyone who’s socially concious of the world because the world is a complicated place with lots of institutional mechanisms and social norms, lots of interdependencies between people, and plenty of evidence of corruption.

If we do want to bark up the tree of natural-inequality-as-justification-for-power, we get into an essentially moral debate over whether or not “natural ability” merits moral superiority or a position of authority over the lives over others. I’m a skeptic. The view being espoused quickly devolves into support for a technocratic oligarchy.

TracyW

I’m taking it that you’re not a fan of J.S. Mills arguments in favour of liberty of speech in chapter 2 of On Liberty.

Also, I think you are unfairly misreading Ray’s point, he’s not arguing that all the people at the top now are amazing, but that there are few people who are really amazing. Talking about how the real world is a complicated case with lots of institutional mechanisms and social norms, and plenty of evidence of corruption misses that Ray is talking not about this world, but about potential future ones, which was after all the topic of Chartier’s post.

As for whether natural ability (or more realistically, some combination of natural ability + experience) merits moral superiority or a position of authority over the lives of others, it doesn’t strike me as unlikely that people would freely choose to defer to leaders from time to time. Or even a great deal of the time, in the case of a truly morally compelling leader. Eg Gandhi’s power came from his moral authority, the rulers of India certainly weren’t compelling large numbers of Indians to follow him. Or protestants following Martin Luthor in revolt against the Catholic Church, they certainly weren’t following the teachings of the authorities. Nor were southern USA blacks following Martin Luther King in protesting against segregation.

Now perhaps the future world will be different and none of these things will happen, as everyone will have the moral superiority of Gandhi or Martin Luther King. But I think you’ve been way too rapid to dismiss this.

andycleary

The way I would put this is simply “specialization/division of labor”. I don’t think we have to say that someone is more “intelligent” to be a manager. A good manager knows that he or she is the *least* intelligent out of his whole team. His job is to remove roadblocks so that his team can get their job done. He simply provides a specialized skillset, no different than a basketball team with a tall center and quick point guards. The smartest people I know often would make terrible managers.

In general, I find it difficult to square the more extreme talk of “anti-hierarchy” with specialization. We’re not all the same – *equal*, yes, but not the *same* – and given the benefits of specialization and division of labor, thank goodness for that.

Ray

Andy, you make a good point, but I don’t think specialization captures the entire issue. If you put 100 clones of me (or you) on a desert island, we’d still have to specialize. But on top of that, people really are unequal in their abilities. Intelligence may not be the quality that makes a good manager or entrepreneur, or scientist, or philosopher, or electrician, etc. But whatever the qualities are that make someone good at a particular job, some people have more of it than others. This makes people both dissimilar AND unequal.

http://www.facebook.com/profile.php?id=100000214887686 Sharon Presley

Actually there are many worker-owned enterprises going on in the US and in Europe. Many libertarians seem blithely unaware of them and would not be happy with the leftist ideology of many of them. Nonetheless they are successful and should not be neglected. The most obvious example is Mondragon in Spain, which has been in existence since the 50s and is very successful. Many American ones can be found in the 2011 book “For All the People: Uncovering the Hidden History of Cooperation, Cooperative Movements and Communalism in America” by John Curl. It’s a fascinating and useful book which would be foolish to ignore simply because the writer is a leftist. Nothing about these enterprises is incompatible with libertarianism, that is, none involve invoking government and everything is voluntary. Instead of just talking about what *might* be, we should be talking about what *is* as well.

http://independent.academia.edu/DannyFrederick Danny Frederick

I think there is a lot in what you say. But it seems to me to be too one-sided. Here are some brief points.

You mention the costs of organisation and management, but you don’t mention the costs of market transactions that are eliminated by organising and managing. This is the Coase point, of course.

You mention things that people don’t like about hierarchies, but you don’t mention the things they do like. I don’t just mean the sorts of things Ray mentioned. I mean the psychological satisfactions of bossing and being bossed. Some people love to be managed, to have a boss, And lots of people love to be a boss. The thing about a hierarchy is that, apart from the bottom layer, everyone is a boss, not just the people at the top. We know from biology that we are predisposed to hierarchy, so there are available explanations for why free people should organise themselves hierarchically quite naturally.

You talk about unions as if these are a boon to workers. In fact, many workers detest unions. Certainly, the better employees tend to think that unions hold them back and hold back the organisation or firm.

Similarly, most people go to work to get a job done and the last thing they want is to end up spending much of their time unproductively in talking shops. Even senior manages, an indispensable part of whose jobs it is to take part in decision-making meetings, complain of wasting too much time in meetings. People who go into business, at every level, usually like to get things done. Sitting around debating is not their idea of fun. Flatter management means less workplace democracy, so does devolution of management control. The more closely a firm mirrors a market, the less collective decision-making it has.

martinbrock

Freed markets generally free people from organizations they hate. That’s the idea anyway. These organizations include trade unions, but I don’t necessarily expect unions to be less popular. I expect them to be differently organized and to serve their members differently, so they might not look much like existing trade unions.

Nick Ford

“You talk about unions as if these are a boon to workers. In fact, many workers detest unions. ”

Sure, but anarchist talk about states as if they are a *detriment* to *people.* But, in fact, most people (not even many) *like* or even *love* the state. But what does that prove? People’s preferences can be based on fallacious reasoning and distorted evidence right?”

“Similarly, most people go to work to get a job done and the last thing they want is to end up spending much of their time unproductively in talking shops.”

I don’t see why talking to your fellow workers is *de facto* unproductive. Especially if it’s going towards further organizing the firm and making sure that things are more fair and just.

“Even senior managers, an indispensable part of whose jobs it is to take part in decision-making meetings, complain of wasting too much time in meetings.”

Well sure, but they’re debating things at a *much* bigger level than what Gary is talking about, no? Gary’s just talking about a small, horizontal firm controlled by workers working with each other not a senior manager directing himself to the concerns of those below him, on par with him, above him, managing the big corporation he is in, the shareholders, the directors, etc. etc.

I see a big difference between the two, don’t you?

“People who go into business, at every level, usually like to get things done. Sitting around debating is not their idea of fun.”

I’m not sure why, as libertarians why, again, you speak like we should be taking status quo attitudes as just because…they exist. It’s like the response, “well laws exist for a reason”. Sure, they do. But so what? What does *having* a reason *inherently* prove? That you’re right? All people have had reasons for their actions (and some claim to not have some tangible reason and perhaps that’s possible too, but that’s another conversation…) but the bottom line is that this doesn’t prove anything.

“Flatter management means less workplace democracy, so does devolution of management control. The more closely a firm mirrors a market, the less collective decision-making it has.”

Why do you think this?

http://independent.academia.edu/DannyFrederick Danny Frederick

Yeah, okay: I think that unions and workplace democracy are detestable. There is, of course, a place for some collective decision-making (it is unavoidable)l but generally, the less of it the better.

I agree with you that people’s preferences can be mistaken – and for
more reasons that merely fallacious reasoning and distorted evidence.

Talking to fellow workers can be very productive. But talking to fellow workers need not mean discussing and voting on what we should do. Autonomous individuals talk to each other without being unable to do anything without others’ agreement.

In general, I think that ‘further organising the firm’ and ‘making sure that things are more fair and just’ is unproductive. The former is usually a bar to efficiency (which is one of the points that Gary makes); so is the latter, because it can interfere with market forces. These are the sorts of reasons why big organisations try to devolve decision-making ‘down the line.’ Such devolution, which frees managers from collective control, goes in the opposite direction to workplace democracy. Flatter management is possible only if fewer decisions are taken collectively. As soon as you start democratising decisions that were previously taken by individual managers, you create the need for the production and sharing of information that requires more tiers of management and bureaucratic support, and everyone spending more time than they used to trying to get a decision made.

Nick Ford

I see you are *trying* to make a lot of points Danny…but neither giving nor even *attempting* to give reasons for most your positions besides in the last paragraph.

So that’s where I’ll focus for now.

“These are the sorts of reasons why big organisations try to devolve decision-making ‘down the line.'”

There are many reasons why big organizations delegate responsibilities or change the way decision-making occurs in contrast to other sorts of organizations.

But of course, a lot of the incentive structures, ways of being able to deal with the problems and so on, are not only a big hang over from the thoroughly unfreed market we live in (thus this comparison seems to contain some right-conflationism to me in some sense) but also suffers from the more general problems big organizations (such as central planning agencies, governments, etc.) face all of the time which Gary and others on the LL side of things have talked much about.

So I don’t find your reasons very helpful in explaining at present phenomenons.

“Such devolution, which frees managers from collective control, goes in the opposite direction to workplace democracy.”

Well hold on there, it doesn’t “free managers” from control at all. Just delegates the tasks that they ultimately *do* have power of but have just given the * ability* to the workers to do as well. The workers still must report to them and make sure things are followed to the T (while they dot the i’s of course!).

In the end the managers *very much* still have collective control:

1. They *still* have the monopoly on firing and hiring

2. They *still* have the privilege of controlling others at their behest

3. They are *still* seen as more important and vital to the success of the organization than the workers are which would almost always tend towards inequality in relations causing hierarchy strife and so on.

“Flatter management is possible only if fewer decisions are taken collectively.”

I don’t see why that’s necessarily true. Besides that “management” may not be the best way to put it. Flatter organizations or firms would come together to do the sorts of decisions they need to do to keep their firm running. Those who can manage their time the best and most efficiently while also being ethical in their planning shall serve both themselves and the community around them the best and in turn they’re more likely to stay in business.

So there are certainly incentives to keep decisions to the important topics and have individual workers as their autonomous selves work things out when that’s easier and they see fit to do that. If it’s a problem that affects the workers on the wholesale or the firm in much the same way then I see no good ethical reason why the workers shouldn’t have some sort of say in it. Practically speaking I’m sure it (like any organizational model) can get messy at times but that doesn’t mean it’s not a good way of doing things.

“As soon as you start democratising decisions that were previously taken by individual managers, you create the need for the production and sharing of information that requires more tiers of management and bureaucratic support, and everyone spending more time than they used to trying to get a decision made.”

I don’t really see why *this* is necessarily true either.

You don’t need managers to do all of these things Danny. Sharon and others have already wisely pointed out places that such isn’t the case or models in which such wouldn’t be the case in any case.

Perhaps our understanding of opening up access to the MoP and the workplace at large differ. But although I think workers should come together through direct democracy and consensus that doesn’t mean every little thing has to be up to consensus or that management is needed or hierarchy is. These seems to me to all be classic fallacies when arguing against these sorts of models.

http://independent.academia.edu/DannyFrederick Danny Frederick

Thanks for your responses, Nick; and apologies for the brevity of my previous message (I was short on time this morning).

There are indeed many reasons why organisations go in for devolving management responsibilities. But I think it all comes down to efficiency, i.e. the balance of output over input. For example, devolving sometimes makes people happier in their work and this tends to make them more productive, thereby increasing output for given inputs. Indeed, if it does not all come down to efficiency in the end, then the organisation’s top managers are failing in their duties, since their job is to meet the organisation’s objectives as efficiently as possible. (That statement applies to non-profit as well as to profit-oriented organisations.)

The managers in an organisation are not just the top managers. There is a whole hierarchy of managers. So devolution does not just mean delegating some decision-making to workers who are not managers. It also means delegating more decision-making to lower level managers, leaving the corporate management team less concerned with detail and more able to focus on the strategic issues.

Here is what happens when a type of decision is devolved. Originally, the decision is taken by an individual or team near the top of the hierarchy. You therefore get a uniform decision for the wide tranche of the organisation that comes under that individual or team. After devolution, that individual or team no longer makes that type of decision. Thenceforward, managers lower down the hierarchy take that decision, each for their own particular area. So it is possible that you no longer have the decision being taken the same way in these different parts of the organisation. Where devolution is to individual workers, you could (in theory) have every one of those workers tackling the same sort of problem in a different way. That may sound bad; but it need not be, because their circumstances may be in some relevant way different from each other. Devolution means diversity or, at least, potential diversity.

Workplace democracy goes in the opposite direction. Instead of everyone doing his own thing, you have everyone doing the same thing, namely the thing that has been decided by a collective decision.

Flatter management means stripping out levels of the hierarchy. That can be done in two ways. Either all the decisions previously taken by the eliminated managers are now taken higher up the hierarchy; or they are taken lower down the hierarchy. (This is approximate because some of the decisions will no longer need to be taken.) Passing all those decisions up the line would cause chaos: the senior management already have enough to do and should be focusing on high-level issues not relative trivia. So it means passing the decisions down the line, i.e., devolution. This in turn means that fewer decisions are taken collectively (as explained above). Thus, flatter management goes in the opposite direction to workplace democracy.

Now suppose that you democratise a decision that individual managers or workers previously took for themselves. Now they have to meet as a group to decide what decision would be best for them all. So, instead of each person knowing his own job and what would be best there, he needs to learn about all the other varied jobs that the other people do and consider what might be the best decision for them. Hence the need for a great deal of information-sharing, learning, debating, meeting, minute-taking, information-processing and so on. Bureaucracy.

Nick Ford

No worries on the brevity thing, I totally get that. Been really stressed out and pinched for time myself lately! Sorry if I made myself sound like I wasn’t understanding.

But on to your points:

There are indeed many reasons why organisations go in for devolving management responsibilities. But I think it all comes down to efficiency, i.e. the balance of output over input. For example, devolving sometimes makes people happier in their work and this tends to make them more productive, thereby increasing output for given inputs. Indeed, if it does not all come down to efficiency in the end, then the organisation’s top managers are failing in their duties, since their job is to meet the organisation’s objectives as efficiently as possible. (That statement applies to non-profit as well as to profit-oriented organisations.)”

So I think the problem here is that you think efficiency can only (or best comes) from management and that you can’t imagine it coming (instead) from the workers. The workers, to you, seem to resemble some sort of central planning committee while the board of directors, many hierarchies of managers the division of classes (management class and worker class) don’t. I’m unsure where the discrepancy comes in there but it definitely exists to me.

I don’t think efficiency should be focused on as absolutely as you do. Of course, it’s *important* to be *good* at what you do and to maximize the output contrary to the input. But is management the best way to do that? I’m not seeing how that’s the case when the knowledge and information problems Hayek and Mises talked about eminently relate to the managers and bosses in big businesses and in businesses in general really. The closer we get to the action,t he better informed we are of the situation, our actions, the potential consequences and so on. Workers are therefore going to be more efficient at managing *themselves* than the managers are of *other people*.

So if you want efficiency it seems to me you should be aiming for more worker autonomy, not more bossism and managerial systems of control.

“The managers in an organisation are not just the top managers. There is a whole hierarchy of managers. So devolution does not just mean delegating some decision-making to workers who are not managers. It also means delegating more decision-making to lower-level managers, leaving the corporate management team less concerned with detail and more able to focus on the strategic issues.”

Right, but this seems less necessary if we’re gonna exist in a context of anarchism where local power and federation of those local powers are much more important than the state or modern industry. There’s *no reason* to have all of their hierarchy, control, and subordination in the workplace when we have a freed market and have smashed both the state and capitalism.

The costs of performing in such a context that you’re speaking of simply seem too high unless they’re gonna be subsided by Benjamin Tucker’s big four monopolies, corporate welfare and so on. And instead, it seems to me that workers owning the firms and directly relating to each other and their products in flatter and more horizontal and smaller firms would be infinitely more flexible and productive than ones constrained by all of the knowledge problems already discussed.

“Here is what happens when a type of decision is devolved. Originally, the decision is taken by an individual or team near the top of the hierarchy. You therefore get a uniform decision for the wide tranche of the organisation that comes under that individual or team. After devolution, that individual or team no longer makes that type of decision. Thenceforward, managers lower down the hierarchy take that decision, each for their own particular area. So it is possible that you no longer have the decision being taken the same way in these different parts of the organisation. Where devolution is to individual workers, you could (in theory) have every one of those workers tackling the same sort of problem in a different way. That may sound bad; but it need not be, because their circumstances may be in some relevant way different from each other. Devolution means diversity or, at least, potential diversity.”

I don’t really see why this devolution of tasks and duties is such a good thing in the management context. I think workers can decide individually, cooperatively and collectively whether they want to work on a certain project in a given firm and don’t necessarily need managers to do something like that.

“Workplace democracy goes in the opposite direction. Instead of everyone doing his own thing, you have everyone doing the same thing, namely the thing that has been decided by a collective decision.”

This is patently absurd. There’s no *need* via collective decision making to be uniform in decisions. If anything there’s *way* more uniformity under the tremendous amount of corporate hierarchy, subordination and huge books of rules and regulations and values that go on in current corporations.

The workers don’t *need* to all do the same thing and for obvious reasons such as different people are better at different things than others. Everyone knows this, and like Alex Strekal said above, no one is claiming in the pursuit of equality we *make* everyone equal in some *mental or physical* way.

Any firm that was owned by the workers that was so inflexible so as to have hegemonic regiments and routines for the workers would either collapse from the inside (due to dissatisfaction) or from the outside (due to external social pressures given those conditions or just their lack of economic viability).

In general I’m just unsure why you *assume* that workers would want absolute uniformity in their actions and not having *anyone* doing anything different. To my knowledge that’s not how modern cooperatives or collectives work and I don’t think that’s captured anywhere in the *theories* of how they’re *supposed* to work either.

So where are you getting this idea from?

“Flatter management means stripping out levels of the hierarchy. That can be done in two ways. Either all the decisions previously taken by the eliminated managers are now taken higher up the hierarchy; or they are taken lower down the hierarchy. (This is approximate because some of the decisions will no longer need to be taken.) Passing all those decisions up the line would cause chaos: the senior management already have enough to do and should be focusing on high-level issues not relative trivia. So it means passing the decisions down the line, i.e., devolution. This in turn means that fewer decisions are taken collectively (as explained above). Thus, flatter management goes in the opposite direction to workplace democracy.”

See, this is why talking about “flatter management” isn’t a good idea (which I’ve already said). We’re aiming for the *abolition* of the managerial and boss class, not the downsizing of it.

No bosses, no masters.

“Now suppose that you democratise a decision that individual managers or workers previously took for themselves. Now they have to meet as a group to decide what decision would be best for them all. So, instead of each person knowing his own job and what would be best there, he needs to learn about all the other varied jobs that the other people do and consider what might be the best decision for them. Hence the need for a great deal of information-sharing, learning, debating, meeting, minute-taking, information-processing and so on. Bureaucracy.”

Again, I’m unsure why you presume these things. You’ve given me no good reason to think that these things are true, just that you think this is how these things operate and thus…they suck. I’m not buying it.

I don’t understand why you think democritzation of work places means just a “flatter management”, more bureaucracy, hedgemonic choices in worker’s day to day lives and so on.

http://independent.academia.edu/DannyFrederick Danny Frederick

Efficiency does not spring only from management, and it is not only management’s responsibility. Everyone in an organisation is responsible for ensuring the efficiency of his own contribution and even of the organisation as a whole (many organisations have staff suggestion schemes). But there is an asymmetry. Managers have to-to-day responsibility for ensuring the efficiency of their subordinates, but not vice versa.

I don’t recognise a division into manager class and worker class.

Workers may well be best placed to work out the most efficient way to do a particular job. But, in general, they are not best placed to know which jobs need doing, because they are not au fait with the overall strategic position of the organisation and the opportunities and threats that it faces. That is what the top managers are for.

The Mises-Hayek argument shows the efficiency of markets and the price system over central planning. But you also have to take account of the Coase argument: the existence of market transaction costs shows a pure market to be less efficient than a market that contains little islands of central planning (firms). What this means is that a free market is not likely to be a pure market (it is important not to confuse those two notions – a pure market means no organisations at all). Within the firm, there are no market prices for workers to respond to: by definition, it is not a market, it is an organisation. So the Mises-Hayek argument does not apply within the firm, though large organisations have tried to mimic the market within the firm in order to provide incentives to efficiency (with more or less success).

When I said that workplace democracy means everyone does the same thing I meant with respect to a particular decision (what I said followed on from what I was saying in the previous paragraph). Suppose everyone decides for himself what he is going to wear to work. Now we make workwear a matter of collective decision. Big meeting. Long debate. Angry faces all round. Vote. One option selected. Now everyone wears the same thing.

It seems to me that you want to have your cake and eat it. You want organisations and collective decisions. At the same time you want everyone to do his own thing. The only way to have both would be if every collective decision concluded that everyone should decide for himself. But then why waste time on collective decision-making?

If you want no bosses, you should want no organisations, that is, you should want a pure market. But then what about the people who want to be in organisations?

Nick Ford

Let me start by saying that I appreciate your patience and willingness to constantly engage with the conversation even if I don’t necessarily understand or agree with all of your presumptions or conclusions. And you do so in a (mostly) friendly way, so cheers for that!

Anyways, on to my remarks:

“Efficiency does not spring only from management, and it is not only management’s responsibility. Everyone in an organisation is responsible for ensuring the efficiency of his own contribution and even of the organisation as a whole (many organisations have staff suggestion schemes). But there is an asymmetry. Managers have to-to-day responsibility for ensuring the efficiency of their subordinates, but not vice versa.”

To me, this sort of stuff just seems to come right off the pages of a companies policy and rules book or something. Hyper-idealistic about itself and unrealistic about what’s *actually* going on.

In reality I think that the majority of the responsibilities that go on in a workplace are pushed down to the workers while the managers can deal with the paperwork and the accounting and whatever else that the workers aren’t trained to do themselves. But the workers are typically going to be the ones helping the business make the money, interact with customers (if it’s in retail or something like it) and going to solve the problems if they’re competent and up to standards (and not, let’s say, new).

The managers, on the other hand aren’t really needed unless something falls out of the worker’s realm of knowledge. But then, this doesn’t mean the managers are necessary or that workers can’t be their own masters. It means the socialization of knowledge has been diluted to the extent that workers must fit within a certain paradigm of knowledge and anything past that paradigm violates the capitalistic narriative currently set in place.

What I hope to abolish (and you, I think, want to reinforce) is this capitalisitc narrative of limitations for the workers.

In any case I think that you’re actually *correct* that managers have to “ensure the efficiency” of the workers and not vice versa and that’s the problem with capitalism! There’s very little oversight the worker can do or will feel like doing. Are they gonna call corporate or higher up to deal with the managers? Call a hotline? Go to the news? I don’t think many of these “solutions” are very viable (much less are gonna come to people’s minds…).

So yeah, there doesn’t need to be more *oversight* from the workers to the management but *no management at all*.

“I don’t recognise a division into manager class and worker class.”

Why?

“Workers may well be best placed to work out the most efficient way to do a particular job. But, in general, they are not best placed to know which jobs need doing, because they are not au fait with the overall strategic position of the organisation and the opportunities and threats that it faces. That is what the top managers are for.”

This sort of things seems a *lot* less necessary when firms, markets and the culture changes such that I am imagining and have been arguing for. If we democratize work places, decentralize and socialize industry as well as open up the market place to more competition, cooperation and federation as well as other things then it seems a lot of the need for knowing *so much* that you “must” have a managerial class seems superfluous to me.

I think the managers are, in the end, despite the so-called intentions of the organization is to get in the way of the workers organizing themselves and controlling their own work and retaining the product of their own labor.

“The Mises-Hayek argument shows the efficiency of markets and the price system over central planning.”

Which also applies to big businesses…

“But you also have to take account of the Coase argument: the existence of market transaction costs shows a pure market to be less efficient than a market that contains little islands of central planning (firms). What this means is that a free market is not likely to be a pure market (it is important not to confuse those two notions – a pure market means no organisations at all).”

Well I’m not *exactly* sure what you’re trying to communicate here but I don’t support “pure markets”.

“Within the firm, there are no market prices for workers to respond to: by definition, it is not a market, it is an organisation.”

I don’t really understand this. Why do you think that markets are mutually exclusive with worker-owned firms? Is this even what you’re saying?

“So the Mises-Hayek argument does not apply within the firm, though large organisations have tried to mimic the market within the firm in order to provide incentives to efficiency (with more or less success).”

I don’t really get this either…

“When I said that workplace democracy means everyone does the same thing I meant with respect to a particular decision (what I said followed on from what I was saying in the previous paragraph). Suppose everyone decides for himself what he is going to wear to work. Now we make workwear a matter of collective decision. Big meeting. Long debate. Angry faces all round. Vote. One option selected. Now everyone wears the same thing.”

So you seem to think that the collective subsumes the individual and is somehow irreconcilable with it. I don’t believe that. I think the collective can make decisions *based* on the individual and certain things should just be left up to the individual. There’s not gonna be *one option* for the workers. There’s gonna be multiple options set forth by multiple workers and then it would go up to a matter of consensus. This is almost always what happens at that sort of stuff, unless we want to presume that workers as a class are all of one mind or something…

Which means if not all of the workers agree that certain kinds of things to wear are the best that can be left up to each workers discretion or there could be a call for a majority vote if that has enough support. But really these are trivial things that I doubt would even come up in meetings unless they were particularly relevant to the job. And further workers can decide for themselves what sorts of decisions will be put up to consensus beforehand. There’s a degree of obviousness that too many meetings can get bureaucratic so trying to balance things would be essential to *any* good firm.

Further, I don’t think that the worker’s decisions means *all* must follow it, that’s what free association/disassociation is about to begin with. If workers don’t like the way the firm is going they can, of course, leave the firm and (actually) start another firm with other fellow workers who might think more closely than they do or do their own independent thing or perhaps not do work at all if they have such the inclination.

And of course measures can be blocked or put up to future discussions and so on. I don’t think that means unwarranted bureaucracy so much as it means *much needed* discussion and debate over how something *is* and *is not* going to be handled. How often that happens and for how long is up to each individual firm and the workers within but, of course, the individuals contained within each firm are important too and the collective should be *based* on individual liberty.

“It seems to me that you want to have your cake and eat it. You want organisations and collective decisions. At the same time you want everyone to do his own thing.”

Untrue. I said workers *can* do their own projects in firms that *they* control, either individually or collectively. Both can happen in a given firm but it also requires cooperation between workers as much as it requires the recognition of each individual person as the *basis* of each collective.

“The only way to have both would be if every collective decision concluded that everyone should decide for himself. But then why waste time on collective decision-making?”

That’s not the only way to have both. You can have collective decisions based on consensus when the matter gets big enough and individual and cooperative decisions made when those are felt necessary instead of the larger collective decisions. But either way these choices are left up to the workers and not the tyranny of the majority (like you’ve suggested), bosses or managers (which you ostensibly prefer) and approximating towards no tyranny at all, however much that is possible.

“If you want no bosses, you should want no organisations, that is, you should want a pure market. But then what about the people who want to be in”

You’re conflating bosses with people who can make decisions which is, frankly, absurd. Anyone can make decisions or organize people, the trouble is in finding who can do it *best*.

Sergio Méndez

“You talk about unions as if these are a boon to workers. In fact, many workers detest unions. Certainly, the better employees tend to think that unions hold them back and hold back the organisation or firm.”

Aside from the points Nick Ford already made, I think we could add the following: In the actuall existent welfare state, the State has assumed many of the function union have in the past. Many things syndicates had to fight in the past (say stuff like vacation, medical aid, a fiar working time, etc) are now mandated by law. So, the moment the state disapears it is workers who must fight again for those things, and the effective proven way to obtain that stuff (even with the state AGAINST them) is a union.

The spam filter. It’s not perfect, and it sometimes takes me a little while to catch its mistakes.

Fritz

You end with this:

“A free society wouldn’t and couldn’t eliminate investor-owned or
boss-dominated firms—nor should it, not only because direct, violent
interference with these patterns of ownership and control would be
unjust but also because workers might often benefit from the ability to
shift risk onto employers and investors. But eliminating state-secured
privilege and remedying state-sanctioned aggression could create
significantly greater opportunities for self-employment and work in
partnerships and cooperatives.”

That’s it, in a nutshell-paragraph. All of the preceding verbiage, in this post and others, is just a waste of your effort and the time of those readers who have bothered to wade through it.

martinbrock

I hate to think that I’ve wasted verbiage, but this paragraph summarizes the point well.

Peter G. Klein

Roderick Long and I debated this a few years ago (links collected at http://organizationsandmarkets.com/2008/12/01/government-and-the-corporation/). Gary raises many good points, but neglects a large theoretical empirical literature on the organizational and managerial drawbacks of proprietorships, partnerships, and cooperatives (all of which, incidentally, benefit from state privilege, as much as do larger, hierarchical entities). The discussion here mostly repeats what Roderick and I covered before, so I won’t add anything here, except one point. Gary says that “Freedom from arbitrary authority is a consumer good,” but does not explain why the exercise of authority under (private) hierarchy is “arbitrary.” Sure, people get irritated with their bosses, but people also get irritated with their spouses, and that doesn’t show that spousal ties are a net negative. Whether people in a purely free society would organize themselves voluntarily into hierarchies, and submit to another’s authority — not because of some weird social pathology but because they respect the knowledge or experience or judgment of the “boss” — is ultimately an empirical question, but there are many reasons to suspect that they would, perhaps even more so than is the case under statism.

My heart belongs on the other side of this argument, but I may have been tipped by Caplan’s point about double taxation. That’s a huge factor working against big firms, and unlike the other variables, one we can actually measure in dollar terms.

To that I would add a factor of my own: the problem of over-compliance. It seems perfectly intuitive that big firms would stand the costs of regulatory compliance better than smaller firms, and that both would stand those costs better than would-be firms. But as a practical matter, the regulatory risk tolerance of big firms seems to decline in proportion as they grow big, and that low risk tolerance comes with massive costs.

For example, I spent a few years at a large firm in a right-to-work, employment-at-will state. In theory we could fire anyone for any reason or no reason, as long as we didn’t do so based on their membership in a protected class. In reality, that’s not how it went at all. Our team of lawyers (the deadweight losers) put so much fear into our human resources division (the losing deadweights) that every potential firing was handled as it would have been inside a French public sector union. Which is to say, we never fired anyone unless they completely stopped showing up or committed a crime (and if you were in a protected class, we could be surprisingly flexible on those points).

And that’s just one example, in one category of operations. We followed OSHA rules that a smaller outfight might have totally ignored. We spent boatloads of cash on “training” whose sole purpose was to secure expert witness testimony in court, but whenever we got sued, we invariably settled before such a witness could even be called. Our risk managers urged us to pay up even on worker’s compensation claims that were known to be fraudulent.

Behind it all was the knowledge that as a big and conspicuous player, we made a very tempting target for lawsuits, fines, and scandals. To avoid those things, we didn’t just spend money, we ritually sacrificed it.

By contrast, a sole proprietor or a two-man LLC might have stared down the same set of worries and threats and said “what the hell, I’ll cut it close and take my chances.”

Just because the state’s rules-as-written might favor market incumbents over little guys and challengers, doesn’t mean they do. You have to consider the impact of the rules-as-actually followed.

MARK_D_FRIEDMAN

Right you are. Huge corporations, especially those with an insufficiently “green,” union-friendly, or generally benevolent public image walk around with a big target painted on their back. Political communities with their own agendas use the state to go after the bad (corporate) guys, like big tabacco, big pharma, big oil, Wal-Mart, etc. As you say, all large corporations are risk-averse, but those with powerful political enemies should be the most concerned. In libertopia these enterprises could still be legitimately attacked by boycotts, public awareness campaigns, etc., and that’s all fine, but they wouldn’t have to worry about the state attorney generals or the feds coming after them for political purposes.

martinbrock

Hi Dr. Klein, I wonder if you ever found this:

Peter G. Klein

I want one!

martinbrock

Good luck! I’d pay at least $200 for a ten minute ride.

http://voodothosting.com/23/ Lorraine Lee

Mentorship isn’t necessarily the same thing as management. The authority of the boot maker concerning boots is a good enough reason to sit down, shut up and pay attention. But not necessarily a good enough reason to justify the power to fire, which people who live in the real world recognize as a political power.

http://independent.academia.edu/DannyFrederick Danny Frederick

Another problem I have with what you say here is the opposition you posit between ‘boss-dominated workplaces’ and ‘democratised’ workplaces. This is a false opposition. Democratisation just makes the majority your boss (and not necessarily the majority in the workplace, just the majority of ‘delegates’ who make the decisions). The opposite of ‘bossism’ is no boss, i.e., complete marketisation with no organisations, so that all co-operation is between independent contractors. But so long as there are organisations, there are bosses, whether the decisions are taken ‘autocratically’ or democratically. And if we do have organisations, I think autocratic ones are better than democratic ones, so long as individuals are able to make their choice whether to join an organisation and, if so, which one. So I suspect that, in a ‘freed market,’ industrial democracy would tend to disappear.

I haven’t read the book, so perhaps you say something about this there.

Nick Ford

“Democratisation just makes the majority your boss (and not necessarily the majority in the workplace, just the majority of ‘delegates’ who make the decisions).”

Ah, I see the issue now Danny. You’re confusing democracy as genus with majoritarianism as species. In other words, what Gary and other LLs (like myself) are calling for (at least definitely in my case) is worker models built upon consent, mutual benefit and consensus in decision making. So I don’t think your criticisms would typically apply to my approach or Gary’s since I doubt he (as an anarchist) supports majoritarianism or the tyranny of the majority.

“The opposite of ‘bossism’ is no boss, i.e., complete marketisation with no organisations, so that all co-operation is between independent contractor.”

I think both Gary and I *welcome* independent contracting and associations based on that that are made in equity, mutuality and on the basis of individual liberty *as well as* worker-owned firms.

But in any cases I am, personally speaking, inclined to resist your attempt to claim that the opposite of bossisim is “complete marketisation” because having the market be hedgemonic is just repeating the mistakes of the current markets.

We don’t want hedgemony, we want plurality, we want anarchism and *lots* of it!

http://independent.academia.edu/DannyFrederick Danny Frederick

Do you mean that all decisions will have to be unanimous? That is worse than democracy – nothing would ever get done.

martinbrock

All decisions within a community are unanimous in the sense that no one within the community objects strongly enough to leave, and leaving is possible, and someone leaving owes nothing to the community, assuming that he finds another community he prefers that doesn’t require him to pay a debt to the community he leaves.

I don’t know what else unanimous could mean. Literal unanimity on every decision is possible only if every individual is a community of one, and this scenario is basically the state of nature, in which every individual follows his own rules so far as his own force permits.

Nick Ford

“…nothing would ever get done.”

That’s a puzzling response given people make decisions based on consent and consensus all of the time in interpersonal relationships. And in a group of 20 people+ at Occupy NH we made consensus based decisions quite often in our first meeting that I attended.

People either are going to operate through consent and consensus or there’s gonna be some sort of *other* model adapted but *that* would have to be *consented* to beforehand. So if people think majoritarian type decisions (super majorities are preferred IMO at worst case scenario) then they can all *consent beforehand* to undertake decisions in that fashion with everyone knowing that can disassociate from the group if they wish.

http://independent.academia.edu/DannyFrederick Danny Frederick

Okay, my statement was a rhetorical exaggeration. But not much would get done.

The other model is the market. You make your own decisions regarding your own property. You only need the consent of others if what you propose to do would infringe their property rights if you did it without their consent. And even then you only need the consent of those specific people. You do not need to bother about the consent of various other interested parties (though you can ask them if you want). And the market was not consented to beforehand (nor was the state). When I arrived in the world both were already here and I was brought up in that environment. The same goes for everyone else.

Nick Ford

“But not much would get done.”

I remain unconvinced.”

“The other model is the market.”

I don’t see what you need this dichotomy for between markets and consensus. People can act based on consensus and use collective decision making in a market as well right? I don’t see why they could not.

For myself I certainly seeing markets as not only *having* organizations that operate on the basis of consensus and direct democracy but that being the *dominant* attitude of markets if they are to perform well.

“You only need the consent of others if what you propose to do would infringe their property rights if you did it without their consent.”

Likewise, you need the consent of others if what you’re gonna do in a firm is going to affect your fellow workers and going to potentially harm one of their projects or something their involved in I feel it’s right to get their consent or input on the matter.

“And even then you only need the consent of those specific people. You do not need to bother about the consent of various other interested parties (though you can ask them if you want). And the market was not consented to beforehand (nor was the state).”

I think the more knowledge and input one has in a given situation the more liklihood they’ll be able to make good decisions. That’s not universally true of course, it depends on the given situation. But I think that’s a decent general rule and one worth trying to approximate as best we can.

And given that, even if, say, the project in a firm I had going on with my fellow workers and I was doing things my own way, I’d still want to let them know so nothing potentially goes wrong (or at least so such a chance is diminished in some manner).

“When I arrived in the world both were already here and I was brought up in that environment. The same goes for everyone else.”

Sounds like a rather specious appeal to nature to me.

http://independent.academia.edu/DannyFrederick Danny Frederick

If you need to get someone else’s consent before you can do something you have at least a delay and possibly a block on proceeding. The more people whose consent you need, the longer the delay is likely to be and the greater is the chance that some will not consent. Isn’t it obvious that not much will get done (except talking about what might be done)?

People can do what they like in free markets, so long as they don’t violate the rights of other people. So, yes, they can form communes, hierarchical companies, mutual-aid societies or whatever. But none of them is required to do any of these things. You don’t need anyone’s consent to remain as an independent contractor. But other people do need your consent before they can include you in their commune or firm or mutual-aid society.

But any form of organisation that arises in a market is not itself an exemplification of market principles. An organisation replaces market relationships with someone giving orders. Even if the orders are arrived at through some democratic process, they are still orders (David Gordon makes this point in his post). In a pure market, no individual, and no collective body, orders anyone to do anything.

It is not true that in a firm you need the consent of others for what you propose. The manager does not need the consent of his subordinates: he tells them what to do. If he thinks their current projects do not contribute sufficiently, or at all, to company objectives, he can tell them to abandon those projects, without consulting them about it. Of course, the subordinates consented to put themselves under managerial control when they entered the firm; but within the firm, some people give orders and others follow them.

That it can be advantageous to obtain knowledge and input from a range of people does not imply that you require the consent of those people before you can proceed.

There is nothing specious about the fact that none of us consented to the social arrangements that we were born into. It is a fact of substantial importance. It is impossible to understand people or society without taking account of it. The failure to take account of it has led philosophers into all ‘The Errors of Constructivism’ (see Hayek’s paper of that title; also Popper’s ‘Toward a Rational Theory of Tradition’).

I’ll respond later to your longer comment (above).

Nick Ford

“If you need to get someone else’s consent before you can do something you have at least a delay and possibly a block on proceeding.”

Potentially. But that depends on the subject matter and whether it can be solved cooperatively or it must be solved collectively. I don’t think things always have to default to the collective (I wouldn’t be much of an individualist if I thought that!) and am *very much* in favor of individuals cooperating to figure stuff out.

“The more people whose consent you need, the longer the delay is likely to be and the greater is the chance that some will not consent. Isn’t it obvious that not much will get done (except talking about what might be done)?”

Well that’s only obvious if everyone has really different values and ideas about what’s going on. But to some extent or another cooperation relies on a unifcation of similar values via people. Thus figuring stuff out becomes easier in some ways in any sort of long-standing cooperation between anyone because patterns of behavior and attitudes are absorbed by our minds and we get progressively better (though not always) dealing with people and ourselves too.

“People can do what they like in free markets, so long as they don’t violate the rights of other people. So, yes, they can form communes, hierarchical companies, mutual-aid societies or whatever. But none of them is required to do any of these things. You don’t need anyone’s consent to remain as an independent contractor. But other people do need your consent before they can include you in their commune or firm or mutual-aid society.”

Well if you want to remain an independent contractor *technically* you’d need the consent of anyone you’d work for…unless you just want to walk up to people’s projects and tinker with them a little and improve them but never ask for permission… 😉

But no, I get what you’re saying here. Though I disagree because I think hierarchy tends to disrupt relations between people and makes equity a lot less possible in social arrangements. So I think those processes should be non-violently put down via economic and social pressures (not legalistic actions or violence) to the point that people understand they’re not a positive force in society and tend to disrupt beneficial human relations, etc.

Again, though, and I want to stress this because it’s important to me you understand: I don’t advocate violence or laws to be made against hierarchy. I support local and grassroots social activism via economic boycotting, various social pressures, strikes, education and so on.

“But any form of organisation that arises in a market is not itself an exemplification of market principles. An organisation replaces market relationships with someone giving orders. Even if the orders are arrived at through some democratic process, they are still orders (David Gordon makes this point in his post). In a pure market, no individual, and no collective body, orders anyone to do anything.”

I don’t necessarily see orders that are followed by consent and through mutual respect and based on individual liberty being the same as dealing with bosses and managers. Seems to me like you’re trying to blur important distinctions by overlooking the processes in each situation. Not necessarily intentionally mind you, but it’s there.

“It is not true that in a firm you need the consent of others for what you propose. The manager does not need the consent of his subordinates: he tells them what to do. If he thinks their current projects do not contribute sufficiently, or at all, to company objectives, he can tell them to abandon those projects, without consulting them about it. Of course, the subordinates consented to put themselves under managerial control when they entered the firm; but within the firm, some people give orders and others follow them.”

Yeah, I’m totally opposed to this and I think that very often (especially in today’s world) the sort of “consent” that’s going on comes from a lack of options due to the hegemonic control over the economy and furthermore through capital that the state and bosses have. As well as the artificial barriers to entry and the many monopolies and various other ways in which today’s markets are rigged and captured in favor of a small elite of people to the detriment of the many.

All of these things lead to *severely* limited autonomy for the workers and their choices and whether they can work for themselves, with their fellow workers or under someone.

“That it can be advantageous to obtain knowledge and input from a range of people does not imply that you require the consent of those people before you can proceed.”

Sure, I agree. But sometimes it does. It depends. I didn’t meant to imply that it *always* implies that so sorry if it sounded otherwise.

“There is nothing specious about the fact that none of us consented to the social arrangements that we were born into. It is a fact of substantial importance.”

Why?

“It is impossible to understand people or society without taking account of it. The failure to take account of it has led philosophers into ‘The Errors of Constructivism’ (see Hayek’s paper of that title; also Popper’s ‘Toward a Rational Theory of Tradition’).”

No offense but I’ve got a lot going on as in, this isn’t the *only* absurdly long debate I’m in and…well quite frankly I’m not too interested in either of these papers or topics right now.

I do appreciate the suggestions though, so thanks.

http://www.facebook.com/les.nearhood Les Kyle Nearhood

There is some wishful thinking in the belief that small business, in an unrestrained enviroment will always run rings around large firms. There is a very large and sound science in Business Managment which has done much to address all of these concerns that beset firms due to size. Many large firms employ decentralized descision making and other flexible polices. Their size offers many benifits including the resources to weather bad economic times.

I see plenty of very large firms that remain dynamic and cutting edge.

In regards to a Boss-free workplace, that seems a bit utopian to me. Even if one is wholly self employed you have a boss, that is whomever is your customer. In any structure, no matter how loose, there has to be someone who makes the final decisions.

And those of you who still see Unionism as some sort of great workplace solvent I want to just point out that recent events with America’s oldest and largest Bakery company show that Unions are beset with all of the same decision making problems including the willingness to occasionally destroy their own industry and remove their own jobs.

andycleary

This point about there always being a “boss” is one that has stumped me before as well. Anyone who has worked in a small company knows that the relationships you build with customers are often more capricious than the ones you build with managers at larger firms… and the situation with venture capital is even worse, though I am unclear whether this crowd would claim that VC would be significantly different in a freed society.

Couldn’t you also get flatter organizations and more entrepreneurialism if the state delivered the public goods that corporations do today? Specifically, health care and retirement?

– Single Payer…save tons of money by crushing the AMA monopoly and giving the government monopsony buying power. Basically, *every other country in the world has done this to some extent.

– Sovereign wealth fund. Canada’s social security is ‘privatized’ in a sense — The CPP investment board owns a giant mutual fund, employees pay 4.95% of salary (matched by employers) up to $51,000 in income…they get 25% of their contribution back at retirement. We could do the same thing, with a smaller contribution amount.

It might seem, then, that smaller, flatter firms could be expected to out-compete larger, more hierarchical ones. But we don’t see lots of smaller, flatter firms in the marketplace. Does this mean that, contrary to expectations, larger firms really are more efficient?

Once they have out-competed those larger hierarchical firms, doesn’t that just clear the ground for them to become hierarchical themselves? Nimble republican Rome out-competed a bunch of rival city states – and then it became a very large and hierarchical empire. You can’t just look at things from the standpoint of static models of competitive markets, but need to consider social evolution. Once a few large entities own everything, it doesn’t really matter if knowledge problems prevent them from operating as efficiently as leaner, more alert and more flexible entities, because there are none of those entities around anymore to compete with.

Damien S.

We could look at data, about which countries have higher levels of small business and self-employment, and try to learn something from that.

Turns out the US near the bottom of the OECD in both. Most European countries commonly dismissed as “socialist” have more, often far more, small businesses than the US. Despite the high taxes and the universal health care and the regulations and the labor laws.

I have one explanation: the US dependence on employer health insurance. The only way to count on having good insurance in the private sector is to be an employee of a big company. Individiduals get totally jerked around, and small businesses get jerked around if a sick person is in their pool. Being self-employed in the US is gambling with your health and life, and those of your family. In poor countries no one has insurance, and everyone’s gambling. In every other rich country, everyone’s covered by universal health care; the only risk of starting your own business is the usual financial risk.

I don’t know if foreign public pensions are more generous than Social Security; certainlyu corporate pensions, as opposed to national or labor union ones, act as golden handcuffs favoring big businesses… or they did until they underwent a demographic transition of lots of retirees and a smaller, aging, workforce. Maybe GM should have listened to the unions after all (who pushed for regional pension plans businesses would contribute to, that would follow workers around. But then workers *could* move around.)

http://peacerequiresanarchy.wordpress.com/ PeaceRequiresAnarchy

Gary says “reduce the perceived legitimacy of bossism” as if bossism (having/being a boss?) was unjust. I would like to know more about why he believes bosses are unjust (assuming this is his view).